Frankly, were we to have prices at half these levels, as were common, say, five years ago, there would be a lot more biofuels and a lot more excitement in financial circles about investing in biofuels.

One of the problems of biofuels – and even advanced biofuels – is that they tend to liberate the hidden value in feedstocks. For example – in the old days, biodiesel emerged in the US in many ways based on the low price for soybean oil some ten years ago.

A little bit of biodiesel production coincided in a whole lot of pick-up in soybean prices. So, attention shifted to waste greases and fryer oils. Back then, you could get paid to pick up waste grease from restaurants. So, technologies emerged to make biofuels from fryer oils – and , voila, now you pay an almost unaffordable price for waste grease — and there are even organized criminal gangs that steal it.

The feedstock problem

More recently a whole new class of aviation biofuels – the HEFA fuels, made from oilseeds — went through a round of certification and a whole lot of excitement. Now, it is very darn hard to find anyone interested in financing a commercial-scale plant to make the fuels. Why? Once again, unaffordable feedstock.

Here in Digestville we are not trained economists, but we are trained observers — and our observation is that the well-intentioned people aiming to invoke the Defense Production Act to commercialize aviation biofuels for military purposes, may have the wrong end of the stick in terms of their proposal to finance production capacity.

Our concern? Finance a wave of production capacity and there is still the problem of feedstock.

Our suggestion: it would be better to finance a wave of affordable feedstock capacity. If you build that, we have little doubt that based on the downstream demand in aviation, and the history of financing in biofuels that the production capacity would be built.

Back in the 1910s, the Navy and US government recognized this. Teapot Dome Oil Field, in Natrona County, Wyoming, the Elk Hills and Buena Vista Oil Fields in Kern County, California were designated as Naval Oil Reserves by President Taft.

What was notable is that the Navy didn’t focus on financing or developing fuel refining infrastructure – they focused on a reserve of feedstock. The US Strategic Petroleum Reserve is not the US Strategic Jet Fuel Reserve, either.

Feedstock first: It was a wise move then and would be a wise move now.

Feedstock first

To advance aviation biofuels – both for military energy security purposes, and to give US airlines access to affordable, low-carbon fuels – why not designate a Naval Agricultural Reserve? As with the original programs in Wyoming and California – production of feedstock from this resource would be reserved for military and aviation use.

Doesn’t have to be owned by the Navy, grown by the Navy, or managed by the Navy. Why not let the private sector do that? It just has to be available for the Navy at a price the Navy can afford.

BCAP with a twist

The DPA office in the Defense Department might even chip in with a novel financing program for would-be feedstock developers – something similar to the Biomass Crop Assistance Program, but with a twist.

Here’s the twist: government money comes with the caveat that the resulting feedstock must be sold at a contracted price to the military or aviation biofuels industry – a price that is affordable in terms of then refining that feedstock into aviation biofuels.

A friend wrote the Digest last week, in the wake of the article we published last Friday, “The Solyndra Effect.”

He asked: Would love to know what you think can be done in the next eight years; you see all the projections people make, what do you think will be the winning technology strategy for commercially viable (price and scale) renewable jet fuel by 2020?

Well, that’s what we think will be the winner – a path to affordable feedstock that makes so many technologies into winners, and sets off a competition to turn affordable feedstock into affordable aviation biofuels. A competition we think that many companies will excel at.

3 Comments

Jim Lane has a great idea here: develop the "upstream" feedstocks first and let the markets drive the "downstream" victors later. The hot "downstream" technologies are attractive to investors because of their concomitant intellectual properties. Feedstock crops are generally not patentable (except for novel hybrid seeds). As a result, feedstock development lags behind. Farmers are not going to grow a new crop if they do not have a guaranteed customer to buy their crop. A DoD/USDA BCAP program for promising biofuel feedstocks would allow early adopter farmers to plant these crops and develop the necessary harvesting and processing infrastructure.

In addition to agave, sweet sorghum is another highly efficient biofuels feedstock that should be expored. It is temperate-climate sugar cane that produces more biomass than switchgrass. A C4 plant, sweet sorghum grows to a height of 12-14 feet in just 120 days. It is drought resistant, requires fewer inputs than corn and can be grown as far north as Canada. It produces sugar juice that can be converted into biomass-based diesel or other biofuels. Simultaneously, it also yields 30-40 tons of grain/acre and its fiber/crushed stalks make excellent cattle and horse feed. Sweet sorghum is a crop that truely provides both fuel and feed at the same time.

Great comments, I especially like the production ratio (energy in/ feedstock out). But alas, we must plod along. Just as in a different
world most roof membranes would produce energy and domestic hot water would come from our roofs, mass transit would be the norm, and transportation fuel would be effectively non-polluting.

We must concentrate on solving problems. Problem-feedstock price, and in this article you have addressed these and offer good advice.
I hope others are taking note, keep at it.

By the way, most corn production goes to cattle feed which the animals can not adapt to and must be given large doses of
antibiotics because they get sick. Cattle need grain. Food for humans is a small percentage of corn production. So when you hear that biofuels takes our food away, it is actually taking cattle food away.

There is agave,a care-free growth plant which is input for biofuel production. Mexico is already pioneer in it.

In times of global concern about food security, there is a serious ethical debate about using food crops and arable land for biofuel production. In the USA, almost one-third of the corn crop is grown for bioethanol production. Brian Fleay of the Australian Association for the Study of Peak Oil and Gas (ASPO Australia) calculated that if the entire sugarcane and wheat crop in Australia is converted to ethanol, it would only supply 20% of Australian transport fuels. This means that by burning our food for fuel, we would have no bread or sugar and very little fuel.
Another potential bioethanol feedstock is agave (Agave spp.). Agave uses a type of photosynthesis called Crassulacean Acid Metabolism (CAM); agave plants open their stomata(microscopic pores) at night and take up carbon dioxide in the dark to form malic acid, which is then metabolised to release carbon dioxide for photosynthesis during the following day. By closing the stomata during the day, less water is lost and water use efficiency may be as much as six times greater than a C3 photosynthesis species, such as wheat. Hence, agave is adapted to semi-arid land not suitable for food production.
According to a study by Dr.Daniel Tan of University of Sydney in collaboration with the University of Oxford, showed that bioethanol derived from agave has a positive energy balance: the bioenergy created is five times the amount required to produce it.

Agave can be grown in wastelands of developing countries as a source of biofuel.

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